Companies sponsoring H-1B workers could face closer scrutiny if they carried out layoffs during the previous year or plan workforce cuts affecting similarly situated US workers under an executive order signed by President Donald Trump on 18 September 2026.
The order directs the Departments of State, Labor and Homeland Security to consider a sponsoring employer's recent or planned layoffs when handling H-1B Labor Condition Applications, petitions, visa applications and decisions involving entry into the United States.
A layoff does not automatically constitute an H-1B violation or impose a one-year ban on sponsorship. Instead, the order makes an employer's layoff history an additional factor federal agencies must take into account when handling H-1B-related matters.
The directive also calls for greater coordination across the federal government. State, Labor and Homeland Security must consult with the Departments of Commerce and Education and the Small Business Administration. Those agencies are directed to provide relevant wage, employment, academic, industrial and other economic information.
Labor to Review Previously Filed LCAs
The order also reaches information connected to H-1B filings employers have already submitted.
Within 30 days of the order, the Department of Labor's Wage and Hour Division must begin reviewing data related to previously submitted Labor Condition Applications, or LCAs.
The review is intended to determine whether further action against sponsoring employers is warranted under Section 212(n)(2)(G) of the Immigration and Nationality Act.
That does not mean every previously certified LCA will automatically be reopened or treated as an enforcement case because an employer conducted layoffs. The order itself says its requirements must be implemented consistently with applicable law.
An LCA is a key part of H-1B sponsorship. The Department of Labor generally must certify the application before an employer submits the related H-1B petition to US Citizenship and Immigration Services.
Through the LCA process, employers make legally required attestations covering wages, working conditions and other employment requirements.
One-Year Lookback Goes Beyond Existing 90-Day Rule
Federal law already contains protections intended to prevent displacement of US workers in certain H-1B cases. Those requirements are narrower than the review outlined in Trump's new order.
H-1B-dependent employers and employers classified as willful violators can face additional non-displacement requirements when the relevant statutory conditions apply.
For direct displacement, the existing protection generally covers the period beginning 90 days before and ending 90 days after the filing of the relevant H-1B petition.
Separate requirements apply in certain cases when an H-1B worker is placed at another employer's worksite. Those protections also use a 90-day period surrounding the placement.
Trump's executive order does not replace those statutory requirements with a one-year prohibition on layoffs.
Instead, it instructs federal agencies to consider an employer's layoffs during the previous year, along with planned future layoffs, when handling H-1B-related LCAs, petitions, visas and entry decisions.
That means a workforce reduction outside the existing statutory non-displacement window does not automatically become an H-1B violation simply because it occurred during the one-year lookback period. It may, however, become relevant when agencies review the employer's H-1B filings.
Immigration law firms Fragomen and Ogletree Deakins said the directive could result in wider scrutiny at several stages of the H-1B process. Both also noted that important details will depend on how federal agencies implement the order.
How Existing H-1B Rules Define Displacement
Current Labor Department rules provide an important benchmark for understanding existing protections against displacement.
Under those rules, a US worker is considered displaced when an employer lays off that worker from a job that is essentially equivalent to the position for which an H-1B worker is sought.
The comparison considers whether the positions involve essentially the same core responsibilities, whether the workers have substantially equivalent qualifications and experience, and whether the jobs are located in the same area of employment.
Additional requirements can apply when covered H-1B workers are placed at another employer's worksite.
The new executive order, however, refers to 'similarly situated' US workers when discussing layoffs. It does not define that phrase or explicitly direct agencies to use the existing 'essentially equivalent' test for the broader one-year review.
That leaves an important implementation question. Future regulations, policies or agency guidance could clarify how officials will determine whether laid-off US workers are sufficiently comparable to positions being filled through the H-1B programme.
The White House says the order is intended to address what the administration describes as abuse of the H-1B programme and displacement of American workers. The administration has cited technology-sector layoffs, outsourcing practices and alleged H-1B violations as part of its rationale for greater scrutiny.
What Employers Still Do Not Know
The executive order does not establish a specific number of layoffs that would trigger adverse action against an H-1B sponsor. It also does not explain how much weight agencies must give a company's workforce reductions when deciding an individual case.
The order authorises agencies to issue rules, policies, operational guidance and other measures needed to implement its requirements.
Future guidance could therefore explain what information employers must provide, how planned layoffs will be evaluated and how officials will determine whether affected US workers are similarly situated to workers being sponsored for H-1B status.
For employers, the immediate change is that workforce reductions may now remain relevant to H-1B scrutiny for longer than the existing statutory non-displacement window.
The order tells agencies to consider layoffs during the previous year as well as planned workforce reductions affecting similarly situated US workers. Exactly how that broader review will influence individual H-1B cases will depend on how Labor, Homeland Security and State implement the directive.
